The archived blog of the Project On Government Oversight (POGO).

Aug 23, 2012

The Department of
Justice has joined a whistleblower lawsuit accusing opinion polling
services company The Gallup Organization
of committing a multi-million dollar fraud on contracts with the U.S. Mint, the
State Department, and other federal agencies.

On
Monday, the court unsealed the complaint filed in
October 2009 by former Gallup employee Michael Lindley. Lindley alleges the
company violated the False Claims Act and the Truth in Negotiations Act (TINA) by
providing the agencies with grossly inflated cost estimates on sole-source
contracts to provide polling and consulting services. He claims Gallup inflated
by two to three times the estimated number of hours required to complete the
work. Lindley also claims that Gallup offered a job to a Federal Emergency
Management Agency (FEMA) official while bidding on a $12 million FEMA subcontract,
exercised undue influence over the awarding of a $15 million contract by the
U.S. Army’s Joint Contracting Command in Iraq, and fired him for his
whistleblowing activities.

The government intervened in the lawsuit only with respect
to Gallup’s contracts with the Mint and the State Department. In its notice announcing intervention, however, the Department of Justice indicated
that it plans to assert new claims with regard to Gallup’s FEMA subcontract. Justice
will file its own complaint in the matter within the next 90 days.

With a dismal record of passing legislation, perpetuated by hyper-partisan gridlock, the 112th Congress has been
called the “worst Congress ever.” Some prefer to stop at “dysfunctional,” but whichever
nickname you choose, there’s something seriously off about Congress these
days. Bills are proposed with the goal of
advancing partisan interests, and not necessarily the public’s. Debates have deginerated into bitter partisan bickering, not thoughtful consideration of public policy.

In such an
environment, it’s natural to search for someone to blame. But according to former Congressman Mickey Edwards, who spent many years as a member of the Republican leadership, the problem in Congress isn’t its members—it’s the system
itself.

In order to combat cronyism and get Congress back on track, he proposes
sweeping changes to our political system, from ending party-controlled
primaries to eliminating corporate donations to candidates. We caught up with
Edwards to talk about provoking accountability, moving beyond labels, and encouraging
a more effective Congress.

POGO: You've said that partisanship, not
polarization, is to blame for dysfunction in and frustration with government
today. Can you explain the difference?

Mickey Edwards: Polarization is a natural part of the
democratic process; there are more than 300 million of us and a lot of
different viewpoints, some of them very strongly held. A democracy
depends on a vigorous exchange between those alternative visions. Some of
the greatest advances in our history have come not from the political center
but from the “poles,” including the civil rights movement and the women’s
movement, both of which were radical reversals of long-held practices and
beliefs.

Partisanship, on the other hand, is the taking of political
positions that seem advantageous to one’s political club. Today, neither
Democrats nor Republicans are open to proposals—no matter what their merits—that
emanate from a member of the other party. The democratic process requires
a willingness to engage honestly in an exchange of views, with an openness to
considering an opponent’s perspective; partisanship cuts off that exchange and
proceeds solely from a cold political calculus that depends on hurting the
other side in order to gain an advantage in the next election. The two
terms—polarization and partisanship—are often confused, but they are very
different.

A new report by the
Department of Veterans Affairs Office of Inspector General (IG) has found
another large business improperly benefited from federal small business
contracts. The offender this time is Health
Net, ranked 221 in the most recent Fortune
500 with $11.9 billion in revenue last year.

According to the IG, Health Net “encouraged” a former senior
VA official to set up a company called Enterprise
Technology Solutions (ETS) that would be eligible for service-disabled
veteran-owned small business (SDVOSB) contracts. (The size limitation for an
SDVOSB is $7 million in annual revenue.) ETS won three such contracts with the
VA, and two other contracts were awarded to another SDVOSB (owned by a former
Health Net employee) which ETS acquired in 2009. The five contracts had a total
value of $82 million between 2009 and 2011.

The IG found that ETS subcontracted all of the work to
Health Net. The contracts required the prime contractor to perform at least 51
percent of the work, but according to the IG, ETS “did not perform any work
under the contracts, much less a minimum of 51 percent of the tasks required by
the contracts.” The majority of the contract revenues ultimately went to Health
Net, leading the IG to conclude that ETS’s sole function was to use its SDVOSB
status to benefit Health Net – in other words, to act as a “pass-through”.
In addition, the IG also determined that ETS and Health Net failed to deliver the
expected cost
savings on the contracts.

Aug 22, 2012

How about the annual compensation of a major defense
contractor’s Chief Executive Officer?

A Project On Government Oversight analysis of executive compensation at the top
five Pentagon contractors – Lockheed
Martin, Boeing,
General
Dynamics, Northrop
Grumman, and Raytheon
– found that the average compensation package of a CEO at one of these firms
was approximately $21.5 million last year, according to the firms’ Securities
and Exchange Commission filings. Total compensation is the sum
of base salary, bonuses, stock awards, option awards, incentive compensation,
deferred compensation (including changes in pension value), and all other
compensation.

The average worker in the U.S. earned $45,230 last year. These CEOs were paid more in an average
day than the average American worker was paid all of last year.

According to a 2011 Congressional Budget Office analysis,
the median compensation (including basic pay, allowances for food and housing,
and tax advantages) for enlisted U.S. military personnel with ten years of
experience was about $64,000. Thus, the Pentagon could afford to pay the salary
of 335 soldiers with the money from just one top defense contractor’s
compensation package.

The CEOs of these top Pentagon contractors are
also making significantly more than their own workers. According to a Deloitte
study, the average wage (just salary, not benefits) for the entire
aerospace and defense industry in 2010 was $80,175. For the price of one CEO
then, these firms could pay the salary of 268 defense and aerospace industry
workers.

Even compared to other CEOs these Pentagon
executives are making an enormous amount of money. An Associated Press study
of S&P 500 CEO’s (i.e. the
largest publicly traded companies) found that the typical CEO received $9.6
million in total compensation last year. Thus, the top Pentagon contractors
could afford two CEOs with the compensation they’re using to pay their current
CEOs.

We’ve told this story dozens of times before: as experts and the public urge the government to reign in nuclear weapons spending, the cost of nuclear weapons projects skyrockets by hundreds of millions—or billions—of dollars.

As the Washington Post editorial board wrote this weekend, it’s the same old story with the government’s planned refurbishment of the B-61 gravity bomb. The “life extension program” of this nuclear weapon was estimated to cost $4 billion a couple of years ago. Now the price is a staggering $10 billion, the Post reported.

The Project On Government Oversight sent a letter to the Department of Defense in February questioning why U.S. taxpayers are spending billions of dollars to refurbish the 200 or so B-61 bombs that the United States deploys in Europe as part of NATO’s nuclear deterrent. As the Post noted, the justification for this deterrent is shrinking:

Aug 17, 2012

Editor's Note: An earlier version of this story listed Textron as the number two polluter. Textron has since submitted upated information to the EPA, which removes Textron from the top 100 list.

Whenever someone puts out a best/worst ranking of corporations, the first thing the Project On Government Oversight does is check to see if any of the contractors in our Federal Contractor Misconduct Database are in it.

This week, the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst published its fourth Toxic 100 Air Polluters list of the worst corporate air polluters in the United States. Sure enough, General Electric is the second worst air polluter.

The list is based on air releases of hundreds of chemicals fr om tens of thousands of industrial facilities across the country. The ranking takes into account the quantity of releases, the toxicity of the released chemicals, and such factors as prevailing winds, the height of smokestacks, and the number of people at risk.

Some workers who are designing and building a major nuclear weapons facility for the government say they feel pressure to put deadlines ahead of safety, according to a recent Department of Energy report.

“Interviewees indicated that schedule pressures can inhibit reporting of concerns,” the report said.

“The heavy emphasis on performance metrics and cost, often at the perceived expense of understanding and developing the right technology, has created issues for the completion of the project,” the report said.

The June report focused on part of the Y-12 National Security Complex in Oak Ridge, Tenn., that is intended to consolidate operations involving bomb-grade uranium for the nation’s nuclear arsenal. When completed, the Uranium Processing Facility will be used for the assembly, disassembly and storage of bomb components and of bomb-grade uranium, according to its website.

The report was posted on a government web site just days after a major security breach at Y-12 last month, when three protesters, including an 82-year-old nun, broke into a high-security area of Y-12. The anti-nuclear activists bypassed security guards and several fences to enter the complex, the Knoxville News-Sentinel reported. The new uranium facility is being built in the same high-security area.

Aug 16, 2012

Fingers are pointing at contractor Raytheon Company after Friday’s incident at JFK International Airport when stranded jet skier Daniel Casillo managed to swim, climb, and walk his way to the terminal undetected by the airport’s high-tech security system. The construction and maintenance of the airport’s Perimeter Intrusion Detection System (PIDS), a $100 million network of fences, sensors, motion detectors, and video surveillance cameras designed to thwart terrorists, was contracted out to Raytheon in 2006 by the Port Authority of New York and New Jersey. The contract requires Raytheon to install PIDS at JFK and three other airports (Newark Liberty International, LaGuardia, and Teterboro).

Raytheon’s Perimeter Intrusion Detection System (PIDS) creates a zone of safety around commercial airports and helps security staff make better decisions on potential threats with greater speed and precision. The system achieves this by detecting, observing, assessing and tracking intrusions to secure areas and by aiding airport security personnel in dispatching the appropriate response to the intrusion.

“The highly touted PIDS system…has proven to be a boondoggle, having never fully come online after a series of troubling delays,” according to the New York Post. Tests of the system in early 2010 found numerous bugs, including false alarms triggered by wind, rain, and squirrels. At the time, WABC-TV reported that the Port Authority had stopped paying Raytheon, putting it on notice for inadequate performance and warning that the project had reached “a critical juncture.” The negative press prompted U.S. Senators Charles Schumer and Robert Menendez to call for an investigation and demand a refund from Raytheon.

In late 2010, the future of one of the U.S. Navy’s prized new weapons systems hung in the balance.

Instead of choosing between competing versions of a warship designed to operate in shallow coastal waters, the Navy wanted Congress’s blessing to buy both of them – one by Lockheed Martin and another by General Dynamics.

Internal Navy records obtained by the Project On Government Oversight and Aviation Week show that, before Congress granted the Navy’s request, tests of the version developed by Lockheed Martin had identified a problem.

“Ship is inherently directionally unstable,” one Navy document said.

The vessel, known as a “littoral combat ship,” was difficult to steer and “requires many… adjustments to maintain a straight course,” the document said.

That information does not seem to have been shared widely at the time.

In response to questions from POGO, a Navy spokeswoman said Navy personnel “limited discussion” of test results, partly because they doubted the findings and partly because the assessments could have influenced the competition.

The spokeswoman, Lieutenant Courtney Hillson, said the directional instability was normal.

“Although seemingly counter-intuitive, all ships actually need some amount of directional instability inherent to the hull in order to maneuver tactically through the water,” Hillson said in a written statement.

However, a source close to the LCS program told POGO that the directional instability affected the crew’s ability to operate the Lockheed ship.

The documents obtained by POGO and Aviation Week show that Navy officials urged personnel involved in the littoral combat ship program to contain or reword the results of the so-called calm water trials conducted in October and November of 2010.

Aug 15, 2012

A recent study by Benjamin Zycher from the libertarian think tank the CATO Institute reaffirms what we’ve been saying all along: Cutting Pentagon spending will not cause the economic nightmare or job loss catastrophe the defense industry wants us to fear.

In addition to CATO, other right-leaning analysts, advocates, and politicians have also been vocally challenging the narrative that defense spending must not be decreased. Grover Norquist, president of Americans for Tax Reform, recently pledged to fight any efforts to divert tax reform revenues toward an increase in Pentagon spending or avoiding across-the-board budget cuts, known as sequestration. Rep. Roscoe Bartlett (R-Md.), a senior Republican on the House Armed Services Committee, has called for a national dialogue on sequestration, recognizing that “the average American out there, by big percentages, wants to cut defense by twice the sequester amount.”

This debate isn’t about which side of the aisle you are on—we can all recognize that national security is rooted in economic security. And in fact, Zycher finds that a reduction in defense outlays could actually result in significant economic gains down the road.

As the saying goes, “The fish rots from the head down.” This is certainly the case at the Y-12 National Security Complex in Oak Ridge, Tenn., where an 82-year-old nun and two accomplices recently broke in, raising serious questions about the Department of Energy’s (DOE) security strategy.

Energy Secretary Steven Chu said in a statement provided to the Knoxville News Sentinel on Monday: “The department has no tolerance for security breaches at any of our sites, and I am committed to ensure that those responsible will be held accountable.” But there is no denying that Y-12 was a giant failure of federal oversight. Now the people being axed are lower-level employees rather than those who have allowed the security standards to fall far below acceptable levels, such as Secretary Chu, himself.

Secretary Chu should be the first on the chopping block. He has been preaching for years that government overseers should get off the back of the contractors and everything will be fine. Then, of course, he is shocked when Y-12 is successfully attacked by an 82-year-old nun.

After only one year in the position, Secretary Chu’s deputy secretary, Daniel B Poneman, sent a memorandum (PDF) to the department with a safety and security reform plan aimed at curtailing pesky government oversight. “Contractors are provided the flexibility to tailor and implement safety programs in light of their situation without excessive Federal oversight or overly prescriptive Departmental requirements,” the memo said.

It should be clear by now that the current culture at DOE and its semiautonomous National Nuclear Security Administration (NNSA) is to take their orders from contractors and provide little or no oversight. As the previous head of contractor-operated laboratory, Lawrence Berkeley National Laboratory, Secretary Chu made clear his disdain for federal oversight, DOE insiders told the Project ON Government Oversight (POGO). In fact, he’s been successful in creating a culture of federal hands off the contractors in the weapons complex.